Shares in former stock market darling Fevertree Drinks (FEVR:AIM) have slumped more than 11% in trade on Tuesday after disappointing investors with slowing UK growth in the first half to 30 June.
That a fairly damp start to this year's summer might understandably cap the thirst of thousands for G&Ts, a summertime classic, the market is in no mood for excuses, sending the stock tumbling from £23 to £20.40.
KEY UK DAMPENS MOOD
While overall revenue rose 13% to £117.3m it was the rather less impressive 5% increase in UK sales that are causing the concern. The UK remains Fevertree's largest single market where more than half of sales typically come, or £60.7m in this half year.
This was below the growth rates anticipated by many analysts, as was earnings per share, which nudged just 7% higher to 24.3p.
The upmarket mixer-maker’s revenue growth was more impressive in the US (up 31% to £19.8m), across Europe (13% higher at £29m) and in Asia.
Asia sales jumped 49%, albeit from a low base, to £7.8m.
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But in the bigger scheme of things its results aren’t that bad, according to AJ Bell investment director Russ Mould, who said the company’s future growth could be on cracking the US market, where progress has been good, as the results show.
US GROWTH COULD 'ACCELERATE'
Mould said, ‘Ultimately Fevertree has become a victim of its own success. Soaring growth rates in recent years have raised expectations for its performance and failure to deliver anything but superior rates leaves it open to fierce criticism.
‘Yet the latest set of results still show a business that continues to grow earnings and make progress with geographic expansion, which has to be applauded.
‘The market will simply have to get used to the cogs changing gear whereby UK growth is likely to moderate and US growth could accelerate.’
